Workers in Chattanooga could be among the biggest beneficiaries of President Joe Biden's push to raise the federal minimum wage to $15 an hour over the next five years, although business groups worry that such a wage boost could be inflationary and end up blocking job opportunities for many young people and low-skilled workers.
A new study by the financial website Lending Tree found that because of Chattanooga's relatively low cost of living, a $15 wage would go much farther than in most major cities. Chattanooga ranked No. 5 among all major U.S. cities in the buying power of the proposed higher minimum wage, which the Biden White House continues to push despite not being included in a comprehensive stimulus measure as originally proposed.
The federal minimum wage of $7.25 an hour hasn't been increased since 2009. Unlike 29 other states that have a higher minimum wage than the federal rate, Tennessee is among five states that don't have any state minimum wage law and are governed strictly by the federal wage law.
"Nobody working 40 hours a week should be living below the poverty line," Biden said in January when he announced plans to push for an increase in the federal minimum wage to $15 an hour. "Hard-working Americans deserve sufficient wages to put food on the table and keep a roof over their heads, without having to keep multiple jobs."
In the proposed Raise the Wage Act of 2021, the White House said boosting the minimum wage gradually over the next five years would reduce the poverty rate by boosting pay for 17 million workers.
Cities that would benefit the most
The metropolitan areas where low-paid workers would benefit the most by a $15 an hour minimum wage rate due to lower costs of living are:
1. El Paso, Texas
2. Toledo, Ohio
3. McAllen, Texas
4. Spokane, Washington
5. (tie) Chattanooga
5. (tie) Harrisburg, Pennsylvania
7. Dayton, Ohio
10. Wichita, Kansas
Source: Lending Tree analysis of MIT Living Wage Calculator and the value of the $15 hourly rate in each market
According to data from the Massachusetts Institute of Technology Living Wage Calculator, the baseline living wage for a single person with no children in Chattanooga is $12.84 an hour, or 16.6% below the $15 minimum wage proposal. The living wage figure reflects how much a full-time, 40-hour-a-week worker needs to pay basic living expenses in each market.
The Lending Tree review of the MIT wage analysis found that workers in about two-thirds of all major metro areas would achieve a livable wage to support themselves if the minimum wage is raised to $15.
The current $7.25 minimum wage rate now supplies only about 56% of a living wage, even for a single person, in Chattanooga.
Business groups opposed to raising the minimum wage insist that the labor market is already pushing up wages, and a government mandate of $15 an hour would both hurt workers and boost overall prices.
"The effective minimum wage in most parts of Tennessee is now $10 or $11 an hour, and we're seeing employers adjust wages in response to the current labor market," said Jim Brown, executive director for the National Federation of Independent Business in Tennessee. "But there are many small businesses, especially in rural areas of our state, where a $15-an-hour wage rate would force them to lay off workers, raise prices and maybe even go out of business."
An attempt to put the minimum wage increase in the $1.9 trillion COVID-19 relief package was stalled in February when Senate parliamentarian Elizabeth McDonough ruled that the wage hike could not pass through a simple majority of the U.S. Senate through the reconciliation process.
Republicans object to the $15 minimum wage increase, claiming that such a universal rate for all jobs across the country could hurt many low-income people in areas where employers would be unable to pay the higher wage for all workers or would simply automate more manual tasks. Even for employers who opt to keep the higher-paid staff, the increased costs for labor are lkely to boost prices on many goods and services, negating much of the value of the higher wages for workers, they contend.
"A $15 minimum wage would destroy small businesses and job opportunities in our workforce," U.S. Sen. Marsha Blackburn said last month after meeting with Tennessee employers concerned about the proposal. "Some politicians are trying to fit their radical agenda into the already massive spending bill."
An NFIB survey of employers found that 92% of small businesses say a $15 per hour minimum wage would be harmful and is projected to cut 1.6 million jobs, primarily among small and family-owned companies.
Danny Todd, owner of the Monterey Foods supermarket in Putnam County, Tennessee, said he "would have a hard time staying in business if minimum wage went to $15 an hour," and would have to cut staff and "try to do it by myself and with my family."
"Companies listed on Wall Street may support a much higher minimum wage because it would give them a competitive advantage, but a hike would make it that much harder for Main Street to even continue to exist," said Kevin Kuhlman, vice president of federal government relations for the business federation.
Contact Dave Flessner at firstname.lastname@example.org or 423-757-6340.
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